Youngkin removes tax cuts, RGGI mandate in budget

Virginia Gov. Glenn Youngkin on Monday released a slate of 233 amendments to the state budget passed by the General Assembly — calling it an opportunity for “common ground.” However, his budget removes language that would mandate Virginia’s future participation in the Regional Greenhouse Gas Initiative, which has been a high priority for Democrats.

It was not clear Monday afternoon whether Democratic legislators agreed with Youngkin’s amendments, and the Virginia Senate and House Democratic caucuses did not immediately release a response following the governor’s news conference Monday.

During his news conference, the Republican Youngkin specifically mentioned Del. Luke Torian and Sen. Louise Lucas, thanking the two Democratic legislative finance leaders for their work in passing a balanced budget on deadline, while noting that he disagreed with some of their priorities. He said that he intends to keep trying to find ways to give Virginians tax relief, while noting that there are no tax decreases — or new taxes — in his budget.

Youngkin also said that there will not be an increase in taxes on electricity bills from the RGGI — an indication that he has removed the state legislature’s addition of language requiring that Virginia participate in the initiative. During former Gov. Ralph Northam’s administration, Virginia joined the greenhouse gas initiative in 2021, but at the end of 2023 under Youngkin, Virginia stopped participating in RGGI, after the state’s Air Pollution Control Board voted to repeal the Northam-era legislation. The legislature’s budget amendments passed in March would have brought the state back into the RGGI.

“I will propose today that we do not fight over tax decreases, but we also recognize it’s not time nor will it ever be for tax increases,” Youngkin said during his remarks. “I believe that’s the first place where we come together and find common ground. It’s structurally balanced, and it can be delivered on time.”

Youngkin’s 2024-26 budget includes $21.2 billion in K-12 education spending, increases higher education spending by $1 billion and increases health and human resources spending by $3.2 billion. It also proposes a 3% teacher pay raise each year, caps college tuition increases at 3%, fully funds Virginia’s share of Metro’s operating shortfall, and provides toll relief in Hampton Roads and additional funding for Interstate 81, according to the governor’s presentation.

Youngkin had called for personal income tax cuts, an increase in the state sales tax, and an extension of the sales tax to digital downloads. However, Democratic legislators removed all of the recommended tax cuts in its amended budget, as well as the sales tax bump, while agreeing to extend the sales tax to digital goods — including consumer purchases and business purchases.

With Youngkin’s new amendments announced, the ball is now in the Virginia legislature’s court. The Virginia State Senate and the House of Delegates must either vote to pass the governor’s amended budget as-is, or vote to reject it — thus leaving the state without a 2024-26 budget unless both sides can come to an agreement by June 30, when the fiscal year ends. The Democratic-controlled legislature returns to Richmond on April 17 to take up the newly amended budget.

Youngkin vetoed a record number of bills this session — 113 bills as of noon Monday — and hadn’t ruled out vetoing the full budget, according to a Washington Post article Saturday. Youngkin pledged after the 2023 elections — in which Democrats gained control of the Virginia State Senate and the House of Delegates — that he would focus on compromising and collaborating with Democrats.

However, relations between the parties soured quickly after the governor announced a $2 billion proposed Alexandria sports arena and entertainment district in December without negotiating with Democratic leadership. During the General Assembly’s regular session, state Sen. Louise Lucas, the powerful chair of the Senate Finance and Appropriations Committee, prevented committee votes on the House of Delegates and Senate versions of the legislation, halting its progress to a Senate floor vote needed to create a state authority to manage the project.

Ultimately, Monumental Sports & Entertainment CEO Ted Leonsis reached a deal with Washington, D.C., Mayor Muriel Bowser to keep the Washington Wizards and Capitals in the District through 2050. At that point, Youngkin had no reason to negotiate with Democrats and vetoed legislation that would have set a $15 per hour minimum wage beginning in 2026 and a measure that would have established a retail market structure for recreational marijuana sales by next year — both Democratic priorities.

The Virginia Legislative Black Caucus will host a news conference Tuesday in Richmond in which Lucas and Torian are expected to discuss the governor’s amendments to the budget.